We suggest you assess your workforce in advance of your start date. This is so you get an idea of who you'll have to enrol and the cost of contributions.
You will have to do a formal assessment during each pay run (or after postponement) so you know exactly who you’ll have to automatically enrol and the contributions due. The minimum level of pension contributions are shown in the table below:
| Employer minimum contribution | Employee Contribution | Total Minimum Contribution |
| 3% | 5% | 8% |
Your workforce will fall into one of the following categories:
| Age 22-state pension age | Below age 22 or over state pension age |
|
Entitled worker
|
Entitled worker
|
|
Non-Eligible Jobholder
|
Non-Eligible Jobholder
|
|
Eligible Jobholder
|
N/A |
Sample contribution calculation
This example is based on an ‘Eligible Jobholder’ contribution rates as at April 2022 and uses ‘Qualifying Earnings’ as the earnings basis to calculate contributions.
The band of earnings used to calculate contributions for auto enrolment is known as Qualifying Earnings. For the 2022/23 tax year this is between £6,240 and £50,270 a year (or £120 and £967 a week, £520 and £4,189 monthly).
Qualifying Earnings include salary or wages, commission, bonuses, overtime payments, statutory sick pay, statutory maternity pay, ordinary or additional statutory paternity pay, and statutory adoption pay.
| Gross weekly wage | £350.00 |
| Minus Lower Earnings Limit (2022/23) | -£120.00 |
| Pensionable pay | £230.00 |
| Employer contribution (3%) | £6.90 |
| Employee contribution (5%) | £11.50 |
| Gross monthly wage | £1500.00 |
| Minus Lower Earnings Limit (2022/23) | -£520.00 |
| Pensionable pay | £980.00 |
| Employer contribution (3%) | £29.40 |
| Employee contribution (5%) | £49.00 |
Employees may receive tax relief on their pension contributions through the net pay arrangement. The employer deducts the pension contributions from the employee’s gross pay before PAYE tax is deducted. Using this method, the employee automatically receives tax relief straightaway at their marginal rate.